GRAPHIC-Sovereign funds off to a slow M&A start in 2014

LONDON, March 17 Mon Mar 17, 2014 7:03am EDT

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LONDON, March 17 (Reuters) - Sovereign wealth funds have been much slower to pursue merger and acquisition deals so far this year after a bumper 2013, according to Thomson Reuters data.

Sovereign wealth funds (SWFs), which invest windfall revenues from oil and other exports for future generations, sealed $155 million of M&A deals in publicly listed markets up to March 10, less than a tenth of the value for the same year-ago period.

The number of deals stood at nine in this period, this graphic shows:

In the same period last year, they made 20 deals worth $2.7 billion.

In the whole of 2013, sovereign funds sealed M&A deals worth $36.5 billion, their highest since 2010. That was still half of the boom year of 2007, when SWFs made deals worth $73 billion.

State-owned wealth funds have been shying away from making headline-grabbing M&A deals since they came under severe domestic pressure after losing an estimated $80 billion at the height of the financial crisis by investing in beleaguered Western banks.

Some funds like Qatar and Norway have been active in making property and infrastructure investments, which are less liquid than equity or debt markets but deliver stable income with a relatively attractive yield.

Oeystein Olsen, governor of Norway's central bank which manages the SWF, told Reuters last month the fund could expand investments in real estate, infrastructure or new asset classes .

Qatar Investment Authority is in talks to invest $200 million in residential property in India, according to a source .

Azerbaijan's $36 billion sovereign wealth fund is planning to buy real estate in Asia this year in order to further diversify its assets.

"Until recently we were very conservative fixed income investors. But we've started investing in riskier assets, private equity and real estate," the fund's chief executive Shahmar Movsumov told a conference last month.

Some sovereign wealth funds may be increasingly forced to keep more windfall income in liquid assets in order to aid their economies, rather than locked up in long-term investments .

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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